Crafting Design with Purpose

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Flooding

April 24, 2011

I live in the Midwest, as a result I’ve been privileged to enjoy the benefits of liquid sunshine. The place where my wife and I store our extra belongings flooded last week. A lot of our stuff was ruined with water damage. We had to chuck stuff out. At one point during our expedition my wife looked at me and asked, “you’re enjoying this aren’t you?” I smiled and said yes. We were able to get rid of half a dozen bags of stuff. We’re feeling a little more nimble.

Question 1: Where do you keep you emrceengy fund? Our emrceengy fund is split between short-term CD’s (6 months term) and a money market fund at an online bank. This keeps the money within reach, but not so easy it can be tapped for routine stupidness.Question 2: What about six months worth of expenses? Is this too much… or too little?Six months savings in today’s environment would be too little in my opinion. Prices and inflation are eating away at the value of today’s money, and the job environment is not stellar in many places. I’d opt for at least a year’s salary in savings. It’s my goal. Right now we have a little over one month’s expenses stashed away. Building emrceengy savings is a long term project, not something done overnight. But windfalls and tax rebates help, heh.Question 3: Would you sacrifice a fully-funded emrceengy fund in order to fully-fund a Roth IRA (or other retirement / education savings account)?No. I try to contribute to both. The Roth gets a set amount each month, and between my Roth, 401(k), rainy day savings, and emrceengy savings, along with my husband’s retirement contributions, we are saving almost 15% of our pay each period. The rainy day savings is also a sink fund for planned expenses like insurance, property tax, etc.Question 4: What is the smallest emrceengy fund with which you wold be comfortable?What I have now one month’s expenses. I minimized debt repayments just to get this built up. I am now focusing on debt again, but all windfalls and unexpected income goes at least partially to pad this fund even more.